Broadstone is calling for stronger governance standards for pension scheme trustees, as the DC sectors looks to consolidate.
Responding to the Department for Work and Pensions’ (DWP) consultation on this issue, the consultancy said trusteeship, administration and governance must adapt quickly to meet the demands of a modern pensions system.
Broadstone said this was particularly important in the DC market, where consolidation is accelerating and the landscape is expected to be dominated by a smaller number of large-scale “megafunds”. It argued that trustee boards would need to adopt clearer risk appetite statements, FTSE-style committee structures and independent oversight of areas such as illiquid investments and decumulation pathways.
The firm also highlighted the need for significantly stronger operational resilience and cyber governance as schemes grow in size and complexity.
Broadstone said consolidation could also heighten structural conflicts of interest, suggesting schemes may benefit from additional safeguards where decision-making becomes more concentrated. Measures it supports include independent procurement processes for material mandates, comply-or-explain rotation or retender cycles for key advisers and documented multi-party reviews for significant decisions made by professional corporate sole trustees.
The consultancy adds that regulators should act earlier and more decisively where governance weaknesses could affect large numbers of savers. It said enhanced powers to direct professional trustee appointments, require independent audits and secure more timely reporting could help deliver better outcomes for members.
On other areas covered by the consultation, Broadstone said it supports mandatory minimum standards for administrators and integrated service providers, including registration with The Pensions Regulator and strengthened oversight powers, alongside orderly exit frameworks to protect members.
The firm also said policy should support both dominant end-game paths for DB schemes. It argued that mandatory pre-buyout data audits, clear allocation of responsibilities between trustees, administrators and insurers, and robust evidence packs would help ensure members receive the correct benefits.
Broadstone also backed the continued professionalisation of trusteeship, stating that professional trustees should meet statutory standards for accreditation, competence, continuing professional development, capacity and independence.
David Brooks, head of policy at Broadstone, said: “Overall, we advocate a regulatory and governance framework that reflects the scale, complexity and interconnectedness of the future pensions system.
“This will require institution-grade governance for DC megafunds, stronger readiness for DB transactions, and system-wide improvements in conflict management, data assurance and administrator oversight.
“It is encouraging that DWP is proactively pursuing measures that could drive a step change in standards across the pensions industry. Ultimately, this is critical to developing a system that will deliver the best possible outcomes and experience for savers, helping to build trust.”
